Quote:
Originally Posted by BlackArcher101
So let me get this straight.... the people who are in dire straights are people, who in the middle of a pandemic and massive housing increases, sought out advice from the BoC on if they should buy a house, and then did so based solely on that advice. Then even though rates were literally bottom barrel, they thought variable was the correct was to go instead of a long term fixed rate, locking in that historically low bottom barrel rate?
Did any of us here do anything like that thinking "oh man, the BoC said that, so were golden, all in baby! No reason to worry about anything, were in the middle of a pandemic though so nothing could go wrong. Hell, lets get some LOC's and buy some cars!". Is that all it took? People were doing it anyways, they felt left out of the housing increases and where they were really lied to is that "housing always goes up, can't go wrong", then bought a $1mil house in ON.
Who in their right mind thought any of this was sustainable? And then to blame the BoC for not predicting the future?
Hell, I know when I bought my house, I sure didn't look up to see what the BoC thought was going to happen in order to make my decision. Certainly looked at many factors, went fixed, ended up paying about 0.5% more than if I stuck with variable, but hey, I'm not a risk taker.
Even as inflation and rates were going up, people were still recommending that variable rate is always better, in fact some never did switch to recommending fixed. And these are the people are are actually giving people mortgages, so where's the uproar over them? Or are we going to keep blaming the BoC like somehow they were the pariah of advice that everyone goes to for making their decisions.
|
No, people who levered up massively are idiots. But I saw broker commentary at the time referencing that comment and suggesting variable, which was discounted to fixed fairly substantially for awhile. A huge percentage of people who got mortgages went variable, including on renewals.
I don't think someone whose broker quotes a bank of Canada promise to keep rates low for years and thus takes a variable rate is a greedy fool.
Not talking by book on this one either - I have a very small percentage of my outstanding debt as variable. But I'm reasonably financially sophisticated and can make the same calculations you discussed above. The people who got hurt are the ones who can't but want to own a house like they've been told is the best/Canadian thing to do their whole lives.